TARP watchdog rips 'excessive' pay

The Treasury Department approved excessive pay for top executives last year at three companies that had been bailed out, the watchdog office for the Troubled Asset Relief Program said in a report Monday.

The report, similar to one released last year, serves as a flash point in the debate over whether the government is being tough enough with executives at companies that received taxpayer funds following the 2008 financial crisis.

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Treasury in 2012 cleared pay packages of at least $3 million for more than half of the top 25 employees at American International Group, General Motors and Ally Financial, according to the Office for the Special Inspector General for TARP.

All three firms had TARP money outstanding in 2012.

The Treasury had also set a maximum of roughly $500,000 in cash compensation, according to SIGTARP, but in 2012, the department allowed 70 percent of the executives to be paid in cash at or above the threshold.

By allowing so many executives to make more than $500,000 in cash, not basing their income on long-term stock and approving all pay raises companies sought from Treasury last year, SIGTARP said Monday, Treasury again “failed to rein in excessive pay.”

“Americans have grown to expect TARP companies … to push against Treasury guidelines designed to curb excessive pay for top executives,” said SIGTARP’s Christy Romero. “However, we also expect Treasury to look out for taxpayers who funded the bailout of these companies by holding the line on excessive pay.”

SIGTARP also said that Treasury approved excessive pay raises for executives at Residential Capital, the former mortgage unit under Ally, as the firm was heading into bankruptcy early last year.

In a letter in response to the report, Treasury’s so-called pay czar, Patricia Geoghegan, who is in charge of managing the amount the executives are paid, said compensation at AIG and GM was in line with industry averages and was necessary for the firms to retain the talent necessary to pay back taxpayers.